Changes in the insurance market at regional level: what is the situation in Peru?

Commercial insurance prices in Latin America increased by 8% in the fourth quarter of 2023 compared to 10% in the previous quarter and against 2% globally, this according to the Global Insurance Market Index published by Marsh.

It is important to note that this is the 24th consecutive quarter in which an increase in insurance prices is observed.

Among the most relevant findings for the region, it was found that property damage insurance increased by 6%, compared to 8% in the previous quarter.

In the case of Peru, the high percentage increases seen in recent quarters have been brought under control. However, the political risk in the country and the uncertainty due to the FEN are still latent. As a result, insurers continue to be very conservative in providing capacity and coverage for all underwriting at the national level.

Marsh also identified that liability insurance pricing increased 11% in the third quarter, up from 15% in the previous quarter.

The increases in auto liability were due to inflation and an increase in accidents and theft.

In addition, risks requiring facultative capacity or different insurance placement structures also experienced a slight decrease in rates due to the participation of international insurers, new reinsurance capacity and local competition.

In Peru, there has been an increase in the declared invoicing of clients, which allows us to observe the reactivation of various sectors such as tourism, agro-exports and mining, mainly favored by the increase in metal prices, among other sectors. The higher facultative supply has allowed maintaining prices and even registering discounts in the market.

On the other hand, prices of financial and professional lines fell 2%.

The decline was due in part to increased competition among insurers for market share, as well as the entry of new opportunities into the market.

There was also a notable shift in insurers' interest in underwriting geopolitical, technology and ESG risks.

In Peru, there has been an increase in client assets of between 10% and 20% accompanied by a tendency to maintain premiums and in some cases present discounts.

Another finding was that reinsurers' interest in cyber insurance is growing in Latin America and rates increased by 3%.

There is a growing interest from reinsurers, especially from the UK, to better understand Latin America. This allows for better negotiation of technical conditions and the possibility of higher limits.

Most clients experienced rate increases; companies considered by insurers to have good cybersecurity controls and risk management policies generally experienced smaller increases.

In Peru, growing awareness of the importance of cybersecurity and the constant threat are driving demand for cyber insurance.

According to Fabio Assolini, director of Kaspersky's Latin America Research and Analysis team, Peru has experienced 107 attacks per minute in the last 12 months. To ensure insurability, reinsurers are now looking for clients to have clear plans for improving and implementing security controls.